Consider the case of a 45-year-old investor socking away a $1 million windfall. Overwhelmed by the choices of how to divvy the cash among asset classes, he defers to the American Association of Individual Investors and its portfolio models. He chooses moderate risk, which calls for 70% in stocks (including 20% apiece in large and midsize companies; 10% small; 15% international; and 5% emerging markets) and 30% in intermediate bonds. The lowest-cost route would be to buy index funds from one of a handful of firms that compete fiercely on fees, such as Vanguard, Charles Schwab, and Fidelity, with its Spartan funds. For example, using Schwab's exchange-traded funds for each of those asset classes would cost 0.068%, or $680 per year to start, with no commissions to buy or sell through Schwab. It's a fine choice, but by paying a little more he may be able to do better.

I'm still trying to get my head around the assessment that "moderate risk" == "70% in stocks".

REALLY?

with $1M you could put a down payment on a house (in the valley)!!!

Well, everyone's fleeing the USD in the next couple years with the immediate exit to stocks due to large, dry powder, cash reserves.   With long-term capital rates shooting up in 2013, I'd say the best thing would be to set up a Kiddie Roth, set up a brokerage account for your kids, set up a section 529 schooling plan.  Otherwise, residential real estate isn't that bad of an idea!

Fascinating.

My first instinct ALSO was housing or education, NOT stocks and bonds.

I guess we've all seen too many Wall Street abuses to believe in old-school investments.

Meanwhile, the stock market keeps proving me wrong. The Dow is on the cusp of 15,000...